Recently, one of the most debated topics in the European Union space is the incidence of abusive clauses in conventions ended between financial institutions and regular consumers, as an expression of business-to-consumer commercial practice. From a scientific point of view, this subject is a ramification of fields of law such as consumer law, banking law, obligations, and European law. From a social perspective, more concretely, the unfair terms are seen as a disastrous impediment that blocks the possibility assumed by one party in performing the initial obligations included in a contract.
Concerning this second perspective, due to the lack of financial education of the consumers, these types of clauses were normally used by banks in a concealed approach to increase their profits or to gain other advantages. In a way, this kind of situation was somehow prognosticated and could easily be anticipated by the past legislation, that subsequently felt the responsibility to regulate some types of legal bindings: firstly, The Treaty on the Functioning of the European Union regulated in Article 169 (ex-Article 153 TEC) the subsidiary principle of consumer protection to implement a basic harmonization of the Member States’ legal systems; secondly, the Directive 93/13/EEC stated the first regulations of unfair terms, and lastly it was followed closely by other European regulations in this field, with the most notable example being the Directive 2008/48/EC on credit agreements for consumers.
Therefore, in the light of the emergence of new types of credit instruments, practical and social problems naturally occurred. In Romania, between 2006 and 2008, a number of banks offered credits evaluated in Swiss francs (CHF) to consumers because of the low-interest rates and the simplicity in legal proceedings. The main reasons for this kind of choice from the consumers’ perspective were the acquisitions of real estate or apartments through mortgages, or to gain credits that would subsequently allow them to acquire funds to cover personal needs, which in many cases translated into the acquisition of various products. The Romanian top banks did not offer these types of credits and this practice was only perfected by financial institutions with much lower fiscal value. No one could predict what came next: after the financial crisis between 2008 and 2009, the Swiss franc economic value almost doubled, and the credits contracted by consumers using this kind of coin subsequently became almost impossible to bear while at the same time the adjacent legal obligations could not be fulfilled. The example of Romania was not a singular incident, as the phenomenon has also manifested in other countries such as Poland, Hungary, Croatia or Cyprus (Hotnews.ro, 2014).
After the eruption of this phenomenon, especially since 2010, The Court of Justice of the European Union (CJEU) has been stating a large variety of decisions, bringing in discussion the almost exact means to evaluate the nature of unfair terms, determined by the appalling increase of litigations based on the issue of the trading coin rise in value. Somehow, the issue of an increase in the value of a trading coin was not exactly included in the ‘unfair terms’ institution, but offered the means for some de rigueur and practical analysis. The principal question addressed was, and continues to be, if the new high value metamorphosed with the help of some clauses included, not known exactly at the start of the credit conventions, should be readjusted and balanced at a new level dictated by the economic situation. Furthermore, if this practice takes place, does it have a completely unfair result or not? Starting from this point, the focus of this article is a concise approach on the matter of evaluating an abusive clause, as seen by the doctrine and the jurisprudence, and to highlight some issues that usually transpire, not only from the perspective of the consumer but also from the perspective of the professional party.
1. The definition of an ‘abusive clause’
The first definition of this term was elaborated by the Directive 93/13/EEC in Article 3.1 as follows ‘A contractual term which has not been individually negotiated, shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer’. From this point, various European countries brought this definition into their own legislation, sometimes in a proper way, sometimes in a slightly deformed way. An expository example for the first approach is the Spanish legislation, which through Royal Legislative Decree 1/2007, in Article 82 states that ‘All stipulations not negotiated individually and all practices not expressly allowed which, contravening the requirements of good faith, give rise, in a manner detrimental to the consumer and user, to a significant imbalance of the rights and obligations of the parties under the contract, shall be regarded as unfair terms’. The deformed approach was implemented in Romania by Law 193/2000, which provides us with Article 4.1: ‘A contract term which has not been directly negotiated with the consumer is regarded as being unfair if, considered in isolation or together with other provisions of the contract, causes the detriment of the consumer and contrary to the requirements of good faith, a significant imbalance between the parties’ rights and obligations’. The problem with this notion is that the Romanian legislator tells us there is a cumulative condition that needs to be fulfilled in order to take into consideration the abusive nature of a term, although in other European laws, there is no double implementation, just a logical consequence: breaking the good faith, the significant imbalance is formed. Therefore, analysing these regulations, two important elements coexist and should be taken into account when scrutinising a specific term: the absence of negotiation and the significant imbalance between the parties' rights and obligations.
2. The absence of negotiation
Firstly, since the liberalisation of contractual relations is a primordial principle in the European law systems, the common practice has cohered to the so-called concept of ‘adhesion conventions`, where a party adheres to a predetermined contract form, usually without negotiating the clauses included, in order to avoid time consumption or other costs. One main disadvantage for the individuals is that the bank has the means to appreciate discretionarily when a financial imbalance occurs on the market. The direct consequence is the modification of the contract terms without any real negotiation between the parties. It should be noticed that, according to European decisions, like CJEU, Barclays Bank SA v. Sara Sánchez García and Alejandro Chacón Barrera, 2013 and CJEU, Sánchez Morcillo Maria and Abril García v. Banco Bilbao Vizcaya Argentaria SA, 2014, the system of protection introduced by Directive 93/13/EEC is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, regarding both his bargaining power and his level of knowledge. Therefore, the national courts should analyse, in each situation, if the professional acted with bad faith, knowing that simply introducing some specific terms would later break the balance in the detriment of the consumers. Secondly, the absence of negotiation is usually doubled in practice by the absence of the necessary information from the bank. In this matter, the European jurisprudence was much more concise, stating broadly that there is an obligation for the professional party to inform the consumer of the risks of contracting a credit, especially when talking about foreign coin trading, so that he is in a position to evaluate, on the basis of clear, intelligible criteria, the economic consequences for his part (CJEU, Árpád Kásler, Hajnalka Káslerné Rábai v. OTP Jelzálogbank Zrt, 2013; Maria Bucura v. SC Bancpost SA, 2014, Ruxandra Paula Andriciuc, and Others v. Banca Românească SA, 2016).
3. The significant imbalance
It was stated that the significant imbalance exists whenever, based on the stipulations of the assembly contract, the clause would not have been assumed by the consumer freely (Goicovici, 2006, p. 76). More specifically, this kind of imbalance arises whenever a term is so weighted in favour of one trader, that it leans the economic balance of the convention meaningfully in the merchant’s favour. A much-extended interpretation of this matter, that took into account the legislation of one State Member, was analysed in CJEU, Mohamed Aziz v. Caixa d’Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa), 2011, where it was stated that the concept of ‘significant imbalance’ in the detriment of the consumer must be assessed in the light of an analysis of the rules of national law applicable in the absence of any agreement between the parties, in order to determine whether, and if so to what extent, the contract places the consumer in a less favourable legal position than the one provided by the national law in force. A concrete approach that analysed the situation of the contractual terms was presented in CJEU, Constructora Principado SA v. José Ignacio Menéndez Álvarez, 2012, where The European Supreme Court stated that the existence of a ‘significant imbalance’ can result even solely from a sufficiently serious impairment of the legal situation in which the consumer, as a party to the contract in question, is placed by reason of the relevant national provisions. This impairment can take the form of a restriction of rights, which in accordance with those provisions the consumer enjoys under the contract, or a constraint on the exercise of those rights, or the imposition on him of an additional obligation not envisaged by the national rules.
4. Conclusions
Taking all of the aforementioned arguments into consideration, it becomes evident that it is essential to always regard the problem of clauses used by the banks in order to reserve the right to convert the loan currency not as an imminent danger, but rather to impute in our practice the question of equality between both parties. Of course, a number of banks took profit of the rise in value of the trading coins in the past, an aspect that was proved in many cases, but we should not always view them in bad faith. It is recommended that every party, when concluding a contract, should be cautious and provide clauses for its maintenance. Using the elements of absence of negotiation and the significant imbalance, we could conclude that whenever we are assessing fairness in abusive clauses, it is useful to first wonder whether the wording of the contract places the consumer in a legal position less favourable than the one that is otherwise provided by the law. From there on, as we highlighted, we should adhere to The European Court Of Justice`s practice, which did not set a banner in its court decisions and did not impute some exact limits that should be taken into consideration. From the Court’s stance, we can enrich our individual research with two points: firstly, that the absence of negotiation does not exist in each case and secondly that the significant imbalance is not to be assumed as a self-evident component either. Only in some specific situations, unfair terms can occur, and when they do, we should pay attention to every possible aspect before qualifying a convention as unfair. This approach should also be applied by the national courts from now on, in order to prevent the condemnation of one party to eternal judgement of internal preachment.
By Andrei Gabriel Pruna
This material was published in Lawyr.it Vol. 5 Ed. 3, September 2018, available only online.
References:
Goicovici, J. (2006) Dreptul consumației. Bucharest: Ed. Sfera Juridică,
Popa, D. (2016) ‘Un an de la explozia francului elvetian. Ce s-a promis si ce s-a realizat pentru a-i sprijini pe cei imprumutati in chf’, Hotnews. Available at https://economie.hotnews.ro/stiri-finante_banci-20730453-explozia-francului-elvetian-promis-realizat-pentru-sprijini-cei-imprumutati-chf.htm (Accessed:)
CJEU, Barclays Bank SA v Sara Sánchez García and Alejandro Chacón Barrera, C-280/13.Available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=151528&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=133886
CJEU, Juan Carlos Sánchez Morcillo María del Carmen Abril García v Banco Bilbao Vizcaya Argentaria, SA, C‑169/14.Available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=155118&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=133962
CJEU, Árpád Kásler, Hajnalka Káslerné Rábai v OTP Jelzálogbank Zrt, C-26/13.Available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=151524&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=134154
CJEU, Maria Bucura v SC Bancpost SA, C‑348/14.Available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=165660&pageIndex=0&doclang=FR&mode=lst&dir=&occ=first&part=1&cid=46936
CJEU, Ruxandra Paula Andriciuc, and Others v Banca Românească SA, C-186/16.Available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=194645&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=134373
CJEU, Mohamed Aziz v Caixa d’Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa), C-415/11.Available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62011CJ0415
CJEU, Constructora Principado SA v José Ignacio Menéndez Álvarez, C‑226/12.Available at http://curia.europa.eu/juris/document/document.jsf?docid=146439&doclang=EN
